Buying dividend stocks when they are trading near their lows can set you up for some swell returns. In addition to locking in a higher-than-usual yield, you may also benefit from a rising price in the months and years ahead. PepsiCo (NASDAQ: PEP), Kimberly-Clark (NYSE: KMB), and Unilever (NYSE: UL) are three stocks that provide investors with high yields and could be great places to invest $5,000 in today.
1. PepsiCo
Soft drink and snack giant PepsiCo makes for a well-diversified company to invest in. Its Pepsi products are well-known around the world, and the company has been expanding through acquisitions to help generate additional growth opportunities. When it last reported earnings in October, its year-to-date organic revenue growth rate was impressive at 11.8%. Its core earnings per share, when excluding the impact of foreign exchange, was also up by 16% year over year.
PepsiCo's business has been able to pass along rising costs to consumers without feeling the effects of a significant drop in volume, as is evident with its strong top- and bottom-line results. In the past year, however, shares of PepsiCo have been flat, as investors may have grown concerned about its ability to rely on price increases for continued growth.
But with a strong brand and a wide range of products, this is still an excellent business to invest in. PepsiCo's dividend yields 3%, and on a $5,000 investment you could be collecting $150 in annual dividend income. Plus PepsiCo is also a Dividend King, which means your dividend income is likely to rise in value over the years.
Currently, PepsiCo's stock is trading within 10% of its 52-week low of $155.83. Now could be an opportune time to add it to your portfolio.
2. Kimberly-Clark
Kimberly-Clark is another Dividend King known for its consistent hikes. On Jan. 24, the company announced it would be raising its dividend for a 52nd consecutive year, boosting its quarterly dividend by 3.4% to $1.22 every quarter. With the new dividend, investors will be earning a 4% yield on the stock -- more than double the S&P 500 average of 1.5%. On a $5,000 investment, that would result in $200 in annual dividend income.
The consumer goods company, known for popular brands such as Huggies and Cottonelle, recently reported its year-end numbers for 2023, which looked fairly strong. The company finished the year achieving an organic sales growth rate of 5%. Although Kimberly-Clark's operating profit fell by 13% to $2.3 billion, that was due to impairment charges related to intangible assets totaling $658 million. Otherwise it was a strong showing for the business.
Kimberly-Clark's stock has fallen 6% in the past 12 months and is close to its 52-week low of $116.32. For dividend investors seeking some long-term stability, this is another good stock to consider buying right now.
3. Unilever
Rounding out this list is Unilever, a massive company known for its household and personal products. Odds are you probably have some of its products in your fridge, pantry, or washroom. From Ben & Jerry's ice cream to its Dove personal care products, Unilever has a broad range of strong brands in its portfolio.
During the first nine months of 2023, the company reported underlying sales growth of 7.7%. The company has relied heavily on price increases, reporting 5.8% price growth in the third quarter (which ended on Sept. 30, 2023) and a 0.6% decline in volume. While the growth may slow down as inflation cools, Unilever is primarily going to attract income investors for its yield and stability.
Boasting a 3.8% payout, this is another fairly high-yielding dividend stock to own, and a $5,000 investment could generate $190 in yearly dividend income. Although Unilever isn't a Dividend King, it has increased its payouts in recent years. And with a payout ratio of 52%, there's room for the company to raise its dividends in the future.
Unilever stock is within just a few dollars of its 52-week low of $46.16, and may be a good investment option to consider today.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Unilever Plc. The Motley Fool has a disclosure policy.
